Premier Foods posted strong double-digit growth in its third quarter, boosted by its “biggest ever Christmas” and significant market share gains.
Overall group sales in the 13 weeks to 30 December were up 14.4% from the prior year to £352.7m.
Premier’s grocery sales were up by 11.9% in the quarter, with strong performances across the portfolio as its brands outperformed their categories, delivering over 110 basis points of share growth.
Brands in strong growth included Bisto, Oxo and Paxo, which had a strong festive season. While sales from new categories more than doubled, including Ambrosia Porridge pots benefiting from the launch of new flavours and Mr Kipling and Angel Delight ice-cream.
Non-branded grocery sales were 14.5% higher reflecting price increases in retailer branded product categories compared to the same quarter last year.
Its ‘sweet treats’ division also returned to strong growth in the quarter, with branded sales up 17.1%, largely due to significantly higher sales of Cadbury cake compared to last year. This strong performance reflected growth in core Cadbury Mini Rolls and cake bars and a softer comparative due to unscheduled maintenance of a plant line last year.
Growth of 28.7% in non-branded sales was due to contract gains in pies and tarts and pricing benefits.
Meanwhile international sales continue to build, growing by a further 11.3% in the period.
In Ireland, growth was broad based, with all Grocery brands significantly up on the prior year. The Spice Tailor and Sharwood’s were major drivers of sales growth in Australia, reflecting strong instore execution. In the USA, Sharwood’s cooking sauces grew strongly, benefitting from increased distribution gains, while Mr Kipling cake is now listed in nearly 2,000 stores.
Premier said it continues to trade strongly and is “well on track to deliver against its previously raised profit expectations”.
Looking further ahead, a full resolution of its pensions schemes is expected within three years, “which will open up a range of value enhancing opportunities to further accelerate shareholder value”, it said.
CEO Alex Whitehouse commented: “We delivered a very strong performance in our important third quarter with double-digit sales growth across the Group, underlined by particularly strong market share gains of over 120 basis points. Our International business had another very good quarter, growing sales by 11%, delivering progress in our strategic markets. Sales in new categories more than doubled, with Ambrosia Porridge pots and Mr Kipling and Angel Delight Ice-cream both standout performers. Meanwhile, The Spice Tailor continued to grow strongly, achieving distribution gains in target markets, while FUEL10K integration into the Group is progressing in line with plan.”
“Festive favourites such as Bisto, Oxo and Paxo contributed to our biggest ever Christmas, as consumers enjoyed not only the core ranges but new products such as Bisto Best meat free gravy and Paxo Chicken and Bacon stuffing. We sold nearly 190 million mince pies, 4 million more than last year, helped by the new Mr Kipling ‘Best Ever’ Signature mince pies.”
“The lower promotional price points we introduced in the third quarter have positively impacted performance while also helping consumer budgets go further. These lower prices will be extended to additional products such as Loyd Grossman cooking sauces and Mr Kipling Bakewell slices in quarter four.”
“With another strong period of trading behind us, and great plans for the coming months, we are well on track to deliver on profit expectations for this year.”
Premier Foods shares have edged up 0.1% to 140.4p following today’s news.
Associated British Foods posted growth of 5.4% in the run-up to the festive period, with grocery and sugar growth adding to raised sales at its Primark retail arm.
Overall sales in the 16 weeks to 6 January 2024 were up 5.4% at constant currency to £6.89bn, up 2.8% at actual currencies.
ABF said its grocery business “performed well”, with sales up 5.4% at constant currency.
Its US-focused brands, including its Stratas joint venture in edible oils, continued their strong performances from last year. Within international brands, Twinings traded well across its key markets. Ovaltine had a strong performance in Western Europe but was weaker overall as it continued to face challenges in Asia.
In Sugar, sales were up 13% at constant currency and processing of the UK sugar beet crop is under way and indications to date are that sugar production will still be significantly above last year despite the recent weather. This should bring production more broadly into line with historical production levels. Vivergo had a mixed period of trading but was overall much better than last year. Illovo, its sugar business in southern Africa, also had a mixed period with a combination of production and currency challenges.
Ingredients was up 0.9% at constant currency, though down 2.8% at actual rates as parts of ABF Ingredients were softer due to continued customer destocking. In agriculture, sales were weaker although certain of the compound feed markets are beginning to show signs of recovery.
Primark trading was good overall with sales up 7.9% for the period which was marked by a slow start given the unseasonal warm weather, and strong Christmas trading. Like-for-like sales grew by 2.1% driven by higher average selling prices.
Its clothing product offer performed well in the period, with sales of womenswear and menswear strong, particularly in performance wear, leisure and tailored clothing and its Rita Ora collection.
Sales of its Christmas ranges were also strong and sold through well. At the start of the period sales of many of our cold weather categories were initially slower but have much improved with the recent cold temperatures.
In the UK, total sales in the period rose by 4.5% with like-for-like sales up by 3.8%. Following the period’s early warm weather challenges, sales grew strongly in the run-up to Christmas.
In Europe excluding the UK, total sales in the period rose by 8.1%, with like-for-like sales up by 1.3%. Performance was mixed with some countries trading well and other countries impacted by a combination of strong comparatives in the same period last year and local economic conditions. Sales in the US grew by 45% in the period driven by new store openings.
ABF said its whole business continues to trade well and it forecasts a year of meaningful progress in both profitability and cash generation, with the profitability improvement being driven by a recovery in Primark margin, a marked improvement in British Sugar profitability, and by reduced losses at Vivergo.
At this early stage in the year, it also now feels more confident in the continued strong performance of both its US-focused brands in grocery and of AB Mauri in Ingredients.
Elsewhere, UK winemaker Chapel Down has issued a trading update for the year ended 31 December 2023, which saw profitable growth and it expand its brand presence both domestically and internationally.
Net sales post-retro (after promotional price support given to customers) were up 14% for the full year of 2023 to £17.2m and up 10% in the second half of the year.
Strong sparkling wine volume and value growth underpinned the premiumisation strategy:
Core sparkling wine net sales grew by 25% to £12m on underlying volume growth of 12% to 887k bottles.
Still wine sales reduced by 7% to £2.6m in a competitive market and with the increase in Duty during the year.
Spirits reduced by 7% to £0.6m as Chapel Down reconfirmed its planned exit from spirits in the first quarter of 2024.
Overall sales growth was spread across all of Chapel Down’s UK & international trade channels and the direct-to-consumer business, “showing the benefits of scale and breadth of distribution”.
Off-trade remains the largest channel and sales grew 9%, with off-trade sparkling up 21% thanks to the introduction of new lines such as sparkling rose along with increased distribution.
On-trade sales were 26%, driven by a significant increase in listings to over 2,000, with over 1,000 being “by the glass”.
Export sales were up 67% primarily due to a very strong first year listing in UK duty free outlets including Heathrow, Gatwick and London City airports. D2C sales were up 18%.
Overall average prices were up 12% during the year, illustrating the continued premiumisation of the brand and favourable mix.
Andrew Carter, Chapel Down CEO, commented: “2023 was a landmark year for English Wine and Chapel Down, and it is great to see the strategic and operational progress that we have delivered, and the continuing sales momentum we have. In line with our 2023 targets, the business achieved double digit net sales revenue growth, driven by the exceptional performance of our traditional method sparkling wine and with growth across all our UK & International trade channels and our Direct-to-Consumer business.
“Chapel Down continues to grow profitably - a core strength which, along with our strong balance sheet, makes us resilient and underpins our ambitious plans. We look forward to updating the market on the continued profitability of our business in our full year audited results.
“Chapel Down is the market leader in an industry which is enjoying rapid and sustained growth, we have the strongest and most recognised brand, the deepest distribution which we continue to expand at pace, and we continue to win international acclaim for the quality of our wines. Reflecting the maturity of the business and our ambitious growth plans, in December Chapel Down’s shares admitted to trading on the London Stock Exchange’s AIM, enabling a wider pool of investors to participate in Chapel Down’s growth in 2024 and beyond.
“Our continued outstanding performance, and the fantastic, record-breaking 2023 harvest, means our passionate and highly skilled team carries significant momentum into the new financial year.”
Finally, pub group Marston’s has issued a trading update for the 16-week period to 20 January 2024 ahead of its AGM today.
Total retail sales in the group’s managed and franchised pubs for the 16-week period were up 8.8% on last year.
Both drink sales and food sales have been strong, “demonstrating the resilience and appeal of our predominantly suburban pubs”.
Like-for-like sales for the 16-week period to 20 January 2024 were up 8.1%, reflecting strong trading over the festive period. Like-for-like sales in the first nine weeks of the 16-week period to 2 December 2023 were up 7.4%, with positive trading momentum continuing into the festive period.
For the key festive days (Christmas Eve, Christmas Day, Boxing Day, New Year’s Eve), like-for-like sales were up 9.6%.
Justin Platt, CEO of Marston’s, commented: “It has been an encouraging start to the year. This, together with an improving outlook in which inflationary headwinds are broadly abating, and the actions we are taking to operate more efficiently and rebuild margins, position Marston’s well for the year ahead.”
“I am delighted to have joined Marston’s and am excited about the opportunity ahead. This is a great business and, whilst still early days, I’ve been impressed by the dedication, talent and expertise of the team. I look forward to getting to know both the team, and the business, better over the weeks and months ahead and working together to build on the trading momentum to maximise the group’s future potential.”
On the markets this morning, the FTSE 100 is up 0.1% at 7,494pts.
Risers include McBride, up 5.3% to 79p, Ocado, up 1.8% to 571.9p and Cranswick, up 1.3% to 4,038p.
Fallers include Virgin Wines, down 2.4% to 37.1p, THG, down 2% to 64.7p and Compass Group, down 1.5% to 2,132p.
Yesterday in the City
The FTSE 100 started the week up 0.4% to 7,487.7pts yesterday.
Risers yesterday included Naked Wines, up 7% to 62.1p, PayPoint, up 2.3% to 528p, Greencore, up 2.2% to 100.9p, Kerry Group, up 1.9% to €78.60, Pets at Home, up 1.9% to 302.4p and Ocado, up 1.5% to 150p.
Fallers included Deliveroo, down 4.4% to 121p, Just Eat Takeaway.com, down 1.9% to 1,150p, Haleon, down 1.4% to 324p, McBride, down 1.3% to 75p and SSP Group, down 0.8% to 220.8p.